Whither Theater?
The arts could suffer, too. Last month, the University of Rochester in New York received a $5 million commitment from two alumni for the construction of a new theater on campus. That gift wouldn’t have been fully deductible under the congressional plan.
“We all agree that we need to pay attention to cost and ensure that the middle class can fully participate in a way they can afford,’’ said Tom Farrell, who oversees fundraising at Rochester, which has a $2 billion endowment. “Pursuing that resolve through a narrow approach with endowments over $1 billion might not be the answer.”
The restrictions have the potential to reorder the world of philanthropy. In the year ended June 30, 2015, colleges raised a record $40 billion in gifts. Education accounts for 15 percent of all U.S. charitable giving, the biggest slice after religion.
Harvard’s Take
The wealthiest institutions get far more than their share. At the top of the heap, Harvard University, with its $35.7 billion endowment, raised $1.2 billion in the year ended in June -- a school record.
Lawmakers from both parties have long pushed for colleges to spend more on aid and cut costs, especially after hearing about extras such as gourmet food and luxury dorms.
Colleges say donors often place restrictions on their gifts, so their endowments can’t be legally shifted to other priorities. Many rich schools already offer substantial aid to the poor. Harvard says it gives aid to families making more than $200,000 a year.
Edelman, the Rowan University donor, has no problem with the tax restriction. He and his wife are giving to create a museum and research space on the 65-acre fossil site near their alma mater’s campus in Glassboro, New Jersey. Rowan has a $173 million endowment. So, now or later, gifts like Edelman’s would be tax-deductible.
“If you want to make a contribution to an absurdly wealthy endowment, then neither you nor the endowment should enjoy a special tax treatment under the Internal Revenue code,” Edelman said.